As reported by many financial institutions, Tompkins Financial
Corporation’s earnings for the quarter and year-to-date periods ended
December 31, 2017, were impacted by the Tax Cut and Jobs Act of 2017,
which reduced the Federal statutory tax rate from 35% in 2017, to 21% in
2018. The change in the tax law created a one-time, fourth quarter,
non-cash write-down of net deferred tax assets in the amount of $14.9
million due to the required remeasurement of the net deferred tax assets
using the new lower tax rate.

President and CEO Stephen Romaine commented, “I am extremely proud of
our Company’s results in 2017. Though our reported earnings are down for
the year, had it not been for the non-cash write-down related to the tax
law change, our earnings would have been at a record level. Coupled with
the general positive trends we have seen in business growth, the lower
marginal tax rate will have a meaningful positive impact on future
earnings.”

A summary of the impact of the tax law changes on 2017 full year
earnings per share is as follows:

Diluted earnings per share for year ended December 31, 2017,
(including the one-time charge related to tax reform) were $3.43, down
12.3% over full year 2016

Adjusted diluted earnings per share for year ended December 31, 2017
(excluding the one-time charge related to tax reform) were $4.42, up
13.0% over full year 2016 (refer to table of “Non GAAP Measures”
included in this press release)

GAAP net income for the year ended December 31, 2017, was $52.5 million,
down from $59.3 million reported in 2016. Diluted earnings per share
were $3.43 for the year ended December 31, 2017, down from the $3.91 per
share reported in 2016. Excluding the impact of the one-time charge
related to changes in the tax law, diluted earnings per share for 2017
would have been $4.42, reflecting an increase of 13.0% over diluted
earnings per share for 2016. Refer to the table of “Non-GAAP Measures”
included in this press release for additional details.

GAAP net income for the fourth quarter of 2017 was $2.5 million, down
from the $15.1 million reported for the same period in 2016. Diluted
earnings per share of $0.16 for the fourth quarter of 2017 were down
83.8% from the $0.99 reported in the fourth quarter of 2016. Removing
the impact of the one-time charge related to tax reform from fourth
quarter earnings would have resulted in diluted earnings per share of
$1.15 for the fourth quarter of 2017, representing a 16.2% increase over
the same period in 2016. Refer to the table of “Non-GAAP Measures”
included in this press release for additional details.

Mr. Romaine further commented, “Tompkins has a history of being a high
performing Company with a long-term focus. In keeping with this
approach, we plan to leverage the benefits of reduced taxes from the Tax
Cut and Jobs Act of 2017 in a way that is consistent with our strategy
of creating long-term value for our clients, shareholders, communities
and employees. This includes planned investments to modernize our
facilities, improve customer-facing technology and expand staff in
support of these initiatives. We have always given generously to the
communities we serve and expect to continue to increase that level going
forward. We have a long history of paying profit sharing to our
employees and we have raised the profit sharing payout that will be paid
in 2018 to 9.0% of employee annual pay. We also plan to raise the
minimum wage paid by our Company to $14.00 - $15.00 per hour based on
geography and we are committed to increasing compensation for all
employees earning less than $18.00 per hour. We are investing just in
excess of $1.0 million to increase our wages to these levels.”

SELECTED HIGHLIGHTS FOR YEAR AND FOURTH QUARTER:

Net interest income for the full year of $201.3 million, is up 11.4%
over 2016; while net interest income for the fourth quarter of $52.0
million is up 12.1% over the same quarter last year.

Total loans of $4.7 billion at year end 2017 were up 9.7% over year
end 2016

Noninterest bearing deposit balances of $1.4 billion at year end 2017
are up 16.3% over year end 2016

Nonperforming assets remain at historically low levels and compare
favorably to our industry peers, with nonperforming assets
representing 0.38% of total assets at year end 2017, compared to 0.36%
at year end 2016.

NET INTEREST INCOME

For the full year ended December 31, 2017, net interest income was
$201.3 million, up $20.7 million, or 11.4% from the same period in 2016.
Net interest income of $52.0 million for the fourth quarter of 2017
increased by $5.6 million, or 12.1% compared to the same period in 2016.

Growth in net interest income was largely driven by an 11.2% increase in
average total loans during 2017, up $444.0 million over average loans in
2016. The loan growth was supported, in part, by a $249.4 million
increase in average total deposits over the same period. The net
interest margin was 3.42% in the fourth quarter of 2017, up from 3.40%
for the most recent prior quarter, and 3.30% for the same quarter last
year.

NONINTEREST INCOME

For the full year, noninterest income of $69.2 million is up slightly
from $68.8 million reported for 2016. Noninterest income was $17.3
million for the fourth quarter of 2017, and was up $996,000 compared to
the same period in 2016. Fee income business related to cards services
and investment and management services contributed to the improvement.
Insurance revenue and services charges on deposit accounts were down,
partially offsetting those improvements. Results for 2017 included
realized losses on available-for-sale securities in the amount of
$407,000, compared to realized gains of $926,000 in 2016.

NONINTEREST EXPENSE

For the full year, noninterest expenses were $171.1 million in 2017, up
7.9% over 2016. Noninterest expense was $46.3 million for the fourth
quarter of 2017, up 17.5% when compared to that same quarter in 2016.
During 2017, the Company invested $2.7 million in a historic
preservation tax credit which yielded Federal and NYS tax credits. The
project was placed in service in the fourth quarter, and accordingly,
the fourth quarter results include the required write-off of this
investment as operating expense and recognition of the related $3.3
million of tax credits generated from the investment as a reduction of
income tax expense. 2017 expenses also included $731,000 of deconversion
expenses related to system conversions (including a core system
conversion completed in the second quarter of 2017); compared to
deconversion expenses of $546,000 recognized in 2016.

INCOME TAX EXPENSE

During 2017, the Company’s effective tax rate was 44.8%, compared to
31.3% in 2016. The increase is mainly due to the $14.9 million one-time
write-down of net deferred tax assets discussed above. Tax expense for
2017 benefited from the $3.3 million historic tax credit described
above, which was recognized in the fourth quarter of 2017. As previously
mentioned, the Tax Cut and Jobs Act of 2017 will reduce the federal
statutory tax rate from 35% in 2017, to 21% in 2018.

ASSET QUALITY

Asset quality trends remained strong in the fourth quarter of 2017.
Nonperforming assets represented 0.38% of total assets at December 31,
2017, up slightly from 0.36% at December 31, 2016. Nonperforming asset
levels continue to be below the most recent Federal Reserve Board Peer
Group Average1 of 0.64%.

Full year provision for loan and lease losses was $4.2 million in 2017,
down from $4.3 million in 2016. Net loan and lease charge-offs for 2017
were $145,000 compared to net charge-offs of $570,000 reported in 2016.
The provision for loan and lease losses was $2.0 million for the fourth
quarter of 2017, up from $1.7 million in the fourth quarter of 2016.

The Company’s allowance for originated loan and lease losses totaled
$39.7 million at December 31, 2017, and represented 0.91% of total
originated loans and leases at December 31, 2017, compared to 0.92% at
December 31, 2016. The total allowance represented 172.84% of total
nonperforming loans and leases at December 31, 2017, up from 164.98% at
December 31, 2016.

CAPITAL POSITION

Capital ratios remain well above the regulatory well capitalized
minimums. The ratio of tangible common equity to tangible assets was
7.24% at December 31, 2017, a decline from the 7.58% reported for the
most recent prior quarter, and 7.25% at December 31, 2016. Contributing
to the decline in capital levels in the fourth quarter of 2017 was the
impact of Tax Cut and Jobs Act of 2017. The change in the tax law
created a one-time non-cash write-down of net deferred tax assets in the
amount of $14.9 million due to the remeasurement of the assets using the
new lower tax rate.

This press release may include forward-looking statements with respect
to revenue sources, growth, market risk, and corporate objectives. The
Company assumes no duty, and specifically disclaims any obligation, to
update forward-looking statements, and cautions that these statements
are subject to numerous assumptions, risks, and uncertainties, all of
which could change over time. Actual results could differ materially
from forward-looking statements.

The statements made herein shall not confer upon any person any rights
or remedies of any nature, and shall not be construed to establish,
amend, or modify any benefit plan, program, agreement, or arrangement,
nor to alter any existing at-will employment relationship between the
Company and its employees.

TOMPKINS FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION

(In thousands, except share and per share data) (Unaudited)

As of

As of

ASSETS

12/31/2017

12/31/2016

Cash and noninterest bearing balances due from banks

$

77,688

$

62,074

Interest bearing balances due from banks

6,615

1,880

Cash and Cash Equivalents

84,303

63,954

Available-for-sale securities, at fair value (amortized cost of
$1,409,996 at December 31,

2017 and $1,442,724 at December 31, 2016)

1,392,775

1,429,538

Held-to-maturity securities, at amortized cost (fair value of
$140,315 at December 31, 2017

and $142,832 at December 31, 2016)

139,216

142,119

Originated loans and leases, net of unearned income and deferred
costs and fees (2)

4,361,482

3,863,922

Acquired loans (3)

310,577

394,111

Less: Allowance for loan and lease losses

39,771

35,755

Net Loans and Leases

4,632,288

4,222,278

Federal Home Loan Bank and other stock

50,498

43,133

Bank premises and equipment, net

86,995

70,016

Corporate owned life insurance

80,106

77,905

Goodwill

92,291

92,623

Other intangible assets, net

9,263

11,349

Accrued interest and other assets

80,555

83,841

Total Assets

$

6,648,290

$

6,236,756

LIABILITIES

Deposits:

Interest bearing:

Checking, savings and money market

2,651,632

2,518,318

Time

748,250

870,788

Noninterest bearing

1,437,925

1,236,033

Total Deposits

4,837,807

4,625,139

Federal funds purchased and securities sold under agreements to
repurchase

This press release contains financial information determined by methods
other than in accordance with accounting principles generally accepted
in the United States of America (GAAP). Where non-GAAP disclosures are
used in this press release, the comparable GAAP measure, as well as
reconciliation to the comparable GAAP measure, is provided in the
accompanying tables. Management believes that these non-GAAP measures
provide useful information. Non-GAAP measures should not be considered a
substitute for financial measures determined in accordance with GAAP and
investors should consider the Company's performance and financial
condition as reported under GAAP and all other relevant information when
assessing the performance or financial condition of the Company. See
"Tompkins Financial Corporation - Summary Financial Data (Unaudited)"
tables for Non-GAAP related calculations.

(4) Average balances and yields on available-for-sale securities
are based on historical amortized cost.

(5) Interest income includes the tax effects of
taxable-equivalent basis.

(6) Nonaccrual loans are included in the average asset totals
presented above. Payments received on nonaccrual loans have been
recognized as disclosed in Note 1 of the Company's consolidated
financial statements included in Part I of the Company's annual
report on Form 10-K for the fiscal year ended December 31, 2016.

(7) Certain acquired loans and leases that are past due are not
on nonaccrual and are not included in nonperforming loans. The risk
of credit loss on these loans has been considered by virtue of the
Corporation's estimate of acquisition-date fair value and these
loans are considered accruing as the Corporation primarily
recognizes interest income through accretion of the difference
between the carrying value of these loans and their expected cash
flows.

(8)Earnings per share year-to-date may not equal the sum of the
quarterly earnings per share as a result of rounding of average
shares.

(9) "Goodwill and intangibles" equal Total Intangible Assets less
Mortgage Servicing Rights in the above tables.